Obama’s trade deals serve corporate interests

Commentary: President pursuing ‘grand bargains’ on trade

WASHINGTON (MarketWatch) — The Obama administration is not having much luck with any “grand bargain” on the domestic fiscal front, so it is also pursuing some big, legacy-worthy foreign trade deals.

The negotiations for big free-trade zones across both the Atlantic and the Pacific are not exactly secret, but the government can comfortably rely on the “my-eyes-glaze-over” effect of trade issues and the understaffing of the media to work on these quietly.

The problem is, of course, that these “free-trade” agreements are really the very antithesis of free trade and generally are designed to further corporate interests under the guise of boosting the economy with export growth.

Ritholtz: Why original thought is shockingly rare

Just as cutting the deficit is presented as a good and necessary thing without offering any evidence, so any agreement with the words “free trade” slapped on it is touted as a boon though no proof is given.

But consumer groups are growing concerned that one of the main objectives of a new accord with the European Union and the proposed Trans- Pacific Partnership is primarily to free U.S. corporations from domestic regulatory restraints by enabling them to seek arbitration in an international forum rather than litigate in U.S. courts.

The battle lines on these issues become clear when you see that the U.S. Chamber of Commerce — which represents corporate interests exclusively — is a big backer of free-trade agreements while labor unions and consumer groups — which are mostly looking out for the little guy — oppose them.

After all, the benefits from the free-trade zone created during the Clinton administration — the North American Free Trade Association, or NAFTA — have been mixed, at best. U.S. trade with Mexico has swung from a small surplus to a large deficit while many Mexican villages have been depopulated through a vast migration of workers northward.

The White House

Ron Kirk, former U.S. trade representative

On the face of it, there’s precious little to be gained by a “free-trade zone” between the U.S. and the EU, since tariff barriers are insignificant and non-tariff barriers generally relate to contentious issues like genetically modified crops that will have to be hashed out anyway.

Bricq, it seems, is less worried than Kirk was about putting another feather in President Barack Obama’s legacy cap, but this is not a case of the French just being their usual difficult selves — they have legitimate concerns about environmental and labor regulations.

As for the TPP, numerous commentators have pointed out that one of its main purposes is to provide patent protection for U.S. drug and software companies, who would gain more leverage in resisting foreign-government efforts to trim the profits on their products.

This might be good for the bottom lines of these companies, but it won’t really do much for the U.S. economy.

It’s not enough to claim, as of the Office of the USTR does on its website that $1 billion in new exports creates some 5,000 American jobs without giving the other side of the coin — new imports under a trade agreement kill thousands of jobs.

It’s a simple economic fact that it is the trade balance as a whole, not just exports, that determines how beneficial a trade agreement is for job creation.

The Economic Policy Institute, a liberal think tank, documented that NAFTA, for instance, did add exports through 2010 that supported about 800,000 U.S. jobs, but led to increased imports that eliminated some 1.5 million jobs here, for a net loss of about 700,000. Read the EPI report (pdf).

And yet, there is Obama touting these broad new trade agreements in his February State of the Union address . The TPP will “boost American exports, support American jobs and level the playing field in the growing markets of Asia,” he said, while a new EU deal is good “because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.”

For both Atlantic and Pacific trade deals, Obama wants to restore the “fast track” procedure, a mechanism that allows the administration to largely evade congressional checks and balances while preventing open and transparent review of the negotiations.

For a president who as a candidate in 2008 promised more transparency and an end to corporate influence in politics, it’s a strange way to create a legacy.

More important, given the experience with trade agreements so far, the administration should have to prove that these new deals will actually create jobs and not just bolster corporate profits.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.